Artesian Resources Corporation Reports 2020 Year-End Earnings and Fourth Quarter Results
NEWARK, Del., March 10, 2021 (GLOBE NEWSWIRE) -- Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider of water and wastewater services, and related services, on the Delmarva Peninsula, today announced earnings results for the fourth quarter and year ended December 31, 2020.
Highlights
- Increased diluted earnings per share by 11.9% to $1.79 in 2020
- Increased revenues by 5.4% in 2020 and 3.5% in the fourth quarter
- Increased common stock dividend by 3%
- Paid quarterly dividends to shareholders for 113 consecutive quarters and increased dividends for the 24th consecutive year
- Invested $40.0 million in 2020 in water and wastewater infrastructure
- Acquired two municipal water systems, adding approximately 3,000 people served in Delaware during 2020, and marking the 6th and 7th acquisition over the past 3 years
- Completed Sussex Regional Recharge Facility, designed to accept over 3 million gallons per day of treated wastewater in Sussex County, Delaware
Year-End Results
Net income for the year ended December 31, 2020 was $16.8 million, a $1.9 million, or 12.7%, increase compared to net income recorded for the same period of 2019. Diluted earnings per share was $1.79 for the year ended December 31, 2020, an 11.9% increase compared to $1.60 for the same period of 2019.
“Our year end results provided a strong finish to what was a challenging year for everyone as a result of the COVID-19 pandemic,” said Dian C. Taylor, Chair, President and CEO. “In an uncertain economic environment, we stayed focused on the Company’s commitment to ensure customers have safe, reliable water service, while continuing to enhance operational efficiencies and control costs in order to sustain resilient financial results,” said Taylor.
Revenues totaled $88.1 million for the year ended December 31, 2020, $4.5 million, or 5.4%, more than revenues recorded for the same period in 2019. Water sales revenue increased $2.9 million, or 3.9%, primarily due to an increase in residential consumption revenue, an increase from customer growth and an increase in Distribution System Improvement Charges (“DSIC”) revenue, partially offset by a decrease in non-residential consumption revenue. Other utility operating revenue increased 32.7% to $6.5 million, primarily the result of an increase in industrial wastewater service revenue related to the minimum required volume of wastewater under contract and an increase in wastewater revenue from customer growth.
Operating expenses, excluding depreciation and income taxes, increased $1.3 million, or 2.8%. The majority of the increase is related to an increase in overall compensation and employee benefit costs. In addition, bad debt expense increased as a result of executive orders issued during 2020 by state governmental agencies requiring utility companies to prohibit late fees and service disconnections for non-payment that led to a longer receivable cycle and the need for increased reserves for bad debt.
Depreciation and amortization expense increased $0.3 million, or 3.1%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.
Federal and state income tax expense increased $0.5 million, or 9.7%, primarily due to increased pre-tax income in 2020 compared to 2019.
Other income, net increased $0.1 million, or 5.8%, primarily due to an increase in miscellaneous income of $0.3 million, related to an increase in patronage from CoBank as a result of a higher average loan balance outstanding and a special distribution in 2020. Allowance for funds used during construction (“AFUDC”), decreased $0.2 million, as a result of lower long-term construction activity subject to AFUDC.
Interest expense increased $0.6 million, primarily due to an increase in long-term debt interest related to the Series V First Mortgage Bond issued on December 17, 2019. This increase was partially offset by a decrease in short-term debt interest, primarily related to lower interest rates and short-term borrowing levels in 2020.
Capital Expenditures
As part of Artesian’s on-going effort to ensure high quality reliable service to customers, $40.0 million was invested in 2020, compared to $40.7 million in 2019, in water and wastewater infrastructure projects including installation of transmission and distribution facilities, replacement of aging mains, rehabilitation of treatment facilities, and redevelopment of wells and pumping equipment.
Artesian continues to invest in critical infrastructure in 2021. In Sussex County the Dagsboro Water Treatment Plant is currently under construction, which will be interconnected with 7 miles of main and 45 fire hydrants to the existing South Bethany system. This will provide an additional 2.0 million gallons per day of water supply to serve the rapidly growing beach community.
“Artesian has remained committed to investments ensuring safe, high quality water and reliable service and infrastructure to meet water and wastewater service needs in our growing Sussex County service area in an environmentally sensitive manner,” said Taylor.
Fourth Quarter Results
Net income remained the same at $3.1 million for both the fourth quarter of 2020 and 2019. Diluted earnings per share also remained the same at $0.33 for both the fourth quarter of 2020 and 2019.
Revenues totaled $21.8 million for the fourth quarter of 2020, $0.7 million, or 3.5%, more than revenues for the same period in 2019. Water sales revenue decreased $0.1 million, or 0.5%, primarily due to a decrease in non-residential consumption revenue. Other utility operating revenue increased approximately $0.7 million, or 50.6%, primarily the result of an increase in industrial wastewater service revenue related to the minimum required volume of wastewater under contract and an increase in wastewater revenue from customer growth. Non-utility revenue increased $0.1 million, or 9.6%, primarily due to an increase in contract revenue related to design fees and an increase in Service Line Protection Plan revenue.
Operating expenses, excluding depreciation and income taxes, increased $0.5 million, or 3.9%, primarily related to an increase in overall compensation and employee benefit costs. In addition, purchased water expenses increased, primarily due to the timing of water purchased under contract.
Depreciation and amortization expense increased $0.2 million, or 6.6%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.
Federal and state income tax expense decreased $0.2 million, or 14.8%, primarily due to permanent tax differences.
AFUDC decreased $0.1 million, or 28.1%, as a result of lower long-term construction activity subject to AFUDC.
Interest expense increased $0.1 million, primarily due to an increase in long-term debt interest related to the Series V First Mortgage Bond issued on December 17, 2019. This increase was partially offset by a decrease in short-term debt interest, primarily related to lower interest rates and short-term borrowing levels in 2020.
About Artesian Resources
Artesian Resources Corporation operates as a holding company of wholly-owned subsidiaries offering water and wastewater services, and related services, on the Delmarva Peninsula. Artesian Water Company, the principal subsidiary, is the oldest and largest regulated water utility on the Delmarva Peninsula and has been providing water service since 1905. Artesian supplies 8.2 billion gallons of water per year through 1,368 miles of main to over a third of Delawareans.
Forward Looking Statements
This release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, the impacts of the COVID-19 pandemic, continued growth in our business, continuing operational efficiencies and cost controls and anticipated future investments in infrastructure. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including: changes in weather, changes in our contractual obligations, changes in government policies, the timing and results of our rate requests, failure to receive regulatory approval, changes in economic and market conditions generally and other matters discussed in our filings with the Securities and Exchange Commission. While the Company may elect to update forward-looking statements, we specifically disclaim any obligation to do so and you should not rely on any forward-looking statement as representation of the Company’s views as of any date subsequent to the date of this release.
Contact:
Nicki Taylor
Investor Relations
(302) 453-6900
ntaylor@artesianwater.com
| Artesian Resources Corporation | |||||||||||||
| Condensed Consolidated Statement of Operations | |||||||||||||
| (In thousands, except per share amounts) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended | Twelve months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Operating Revenues | |||||||||||||
| Water sales | $ | 18,299 | $ | 18,382 | $ | 76,476 | $ | 73,609 | |||||
| Other utility operating revenue | 2,108 | 1,400 | 6,525 | 4,916 | |||||||||
| Non-utility operating revenue | 1,344 | 1,226 | 5,140 | 5,070 | |||||||||
| 21,751 | 21,008 | 88,141 | 83,595 | ||||||||||
| Operating Expenses | |||||||||||||
| Utility operating expenses | 10,797 | 10,324 | 40,338 | 39,189 | |||||||||
| Non-utility operating expenses | 890 | 931 | 3,277 | 3,315 | |||||||||
| Depreciation and amortization | 2,863 | 2,686 | 11,143 | 10,803 | |||||||||
| State and federal income taxes | 1,004 | 1,179 | 5,684 | 5,181 | |||||||||
| Property and other taxes | 1,357 | 1,297 | 5,404 | 5,182 | |||||||||
| 16,911 | 16,417 | 65,846 | 63,670 | ||||||||||
| Operating Income | 4,840 | 4,591 | 22,295 | 19,925 | |||||||||
| Allowance for funds used during construction | 253 | 352 | 1,170 | 1,410 | |||||||||
| Miscellaneous | (51 | ) | (55 | ) | 971 | 614 | |||||||
| Income Before Interest Charges | 5,042 | 4,888 | 24,436 | 21,949 | |||||||||
| Interest Charges | 1,928 | 1,789 | 7,619 | 7,024 | |||||||||
| Net Income | $ | 3,114 | $ | 3,099 | $ | 16,817 | $ | 14,925 | |||||
| Weighted Average Common Shares Outstanding - Basic | 9,347 | 9,289 | 9,327 | 9,277 | |||||||||
| Net Income per Common Share - Basic | $ | 0.33 | $ | 0.33 | $ | 1.80 | $ | 1.61 | |||||
| Weighted Average Common Shares Outstanding - Diluted | 9,388 | 9,337 | 9,369 | 9,326 | |||||||||
| Net Income per Common Share - Diluted | $ | 0.33 | $ | 0.33 | $ | 1.79 | $ | 1.60 | |||||
| Artesian Resources Corporation | |||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||||
| (In thousands) | |||||||||||||
| (Unaudited) | |||||||||||||
| December 31, | December 31, | ||||||||||||
| 2020 | 2019 | ||||||||||||
| Assets | |||||||||||||
| Utility Plant, at original cost less | |||||||||||||
| accumulated depreciation | $ | 559,561 | $ | 530,721 | |||||||||
| Current Assets | 17,619 | 14,207 | |||||||||||
| Regulatory and Other Assets | 16,038 | 15,440 | |||||||||||
| $ | 593,218 | $ | 560,368 | ||||||||||
| Capitalization and Liabilities | |||||||||||||
| Stockholders' Equity | $ | 169,426 | $ | 160,268 | |||||||||
| Long Term Debt, Net of Current Portion | 142,333 | 144,156 | |||||||||||
| Current Liabilities | 43,724 | 25,599 | |||||||||||
| Net Advances for Construction | 4,578 | 5,421 | |||||||||||
| Contributions in Aid of Construction | 160,258 | 149,479 | |||||||||||
| Other Liabilities | 72,899 | 75,445 | |||||||||||
| $ | 593,218 | $ | 560,368 | ||||||||||